How To Get Started Paying Off Your Debt

This is a guest post by the amazing Francesca over at frompenniestopounds! She’s had experience with debt, and overcoming it, so I thought who would be better to give some advice on how to start paying off your debt!

The Frugal Frenchie

When you realise that you have a bit of a debt problem, it can be a bit overwhelming in knowing where to start tackling it and making a plan to get rid of it completely!

Paying the minimum payments each month is the slowest possible way of doing it, not to mention spending an absolute fortune on interest costs. Paying off your debt is one of the best feelings ever, as crossing the monthly payment amounts off your budget is so satisfying. Furthermore, without debt payments,  you are freeing yourself up for better things, such as money spent on holidays, retirement, having fun, and security for your family.

Add up all of your debt

This is the first step, but it can definitely feel like one of the scariest. Ignorance is bliss, and knowing that you will have the numbers in front of you and can’t avoid them, can be pretty overwhelming, and quite frankly, upsetting. It will all be worth it, however – once you’ve started tackling the debt you’re on your way to getting it sorted and being financial free again!

How To Get Started Paying Off Your Debt

Go into your internet banking and look at the direct debit/standing order section, as this is where the monthly debts that you pay the minimum payment for will be. Have a look at your bank statements (either online or paper versions) and check through to see if there are any other payments that you make towards loans etc that you may not have direct debits set up for. Do you pay some of your debt in cash, e.g. for kids classes?

Write down all of your debts and how much you owe in total, and how much the monthly repayments are currently. Don’t worry about what order to put them in yet as we will be tackling that in the next step.

Find out the interest rates

This is really, really important, and not something that you should skip despite the temptation. It’ll probably mean going back through all of your paperwork to find out when you took the debt out and which interest rate it was on.

Go through all of your paperwork, and if you can’t find it, make sure that you find out the interest rates and when they run out/increase. If you can’t find the paperwork then you will have to ring up the company in question and ask them.

How To Get Started Paying Off Your Debt

This is essential as you could be paying out a ton of money on something that you don’t need to be! Interest means that you will end up spending potentially thousands more than you need to, especially as interest rates aren’t fixed – so they will likely increase after a certain period of time… definitely look it up or ring the company!

Interest rates are also a good way to look at which debt to pay off first – do you pay off the debt with the highest interest first, which will probably make sense mathematically, or do you go for the smallest debt first for the psychological benefits? This is a completely personal choice, there’s no right or wrong answer; whichever is of biggest priority to you.

Once you have found your interest rates for each of your debts, it may be time to look at doing a balance transfer. Please note that this is not for everyone, and you need to be sensible about this. You need to know that you will not – under any circumstance – give in and go back to getting into more debt.
If you are 100% committed to paying off debt and know that you will not slip up, you can look at getting a 0% balance transfer. I personally did this for one of my credit cards when I was paying off debt, and it saved me loads of money in interest.

How To Get Started Paying Off Your Debt

However, doing a 0% balance transfer means taking out a new line of credit – which not everyone will be eligible for. A good resource for this is Money Saving Expert, where they will be able to tell you if you are likely to be accepted or not, and the best ones that are out there.

Even though a 0% balance transfer sounds amazing, don’t forget that it’s like most debt – the interest rate can change. There are usually set dates when the 0% interest rate will vanish and the interest rate will go up again. This is something to bear in mind if you do decide to go down this route – will you pay it off before the 0% runs out?

Create a budget

Budgets are one of the most efficient ways of making sure that your money is working as best for you as it possibly can. After all, no-one wants to spend their money on pointless stuff, do they? If you could spend less money on your electricity bill and then have that extra money for a night out or something fun (even paying off debt, I promise you that it does turn into a bit of a game!), you would, wouldn’t you?

When it comes to making your budget, start with all of your incoming money – salary (after tax), benefits, child maintenance etc.  This can be a bit more complicated if you don’t get the same amount every month coming in but don’t worry, just put down the average or minimum amount that you will definitely be receiving.

How To Get Started Paying Off Your Debt

The next step is the one that most people find the trickiest, because if you don’t already have a budget or aren’t keeping track of it, you may not have a clue how much is going out of your account each month. I’m talking about adding up all of your expenses. Go through your bank statements (either on your internet banking or paper statements), and add up everything – this will enable you to get the best picture of the money that is going out of your account each month. If you guess on the variable expenses e.g. groceries, you could leave yourself short.

Your internet banking should also have a section that lists all of your direct debits and standing orders and the dates that they come out, but don’t forget any expenses that you pay for annually such as car insurance.

My favourite way of budgeting is the zero-sum method – which is where all of your money is allocated. So for example, say you have your income at £1000 per month and your expenses at £800 (in an ideal world mine would be this low!), this would leave you with £200. The temptation to spend this £200 on whatever takes your fancy is too strong, so instead of leaving yourself that money floating around, you allocate it – for example £100 into your savings, £100 towards your Christmas fund.

Reduce Your Expenses

Now that you’ve got all of your expenses listed, you can see exactly how much is going out of your account. But what if you could have less money going out each month? You can do this by cutting out things – such as cancelling gym memberships, cinema passes, TV packages etc, and you can also do this by switching providers on what you currently have e.g. TV, internet, electricity etc.

It is quite overwhelming to try and reduce all of your expenses at once, so perhaps pick one to focus on at first and see if you can get it cheaper elsewhere.

Earn Extra Income

Now that you’ve got your expenses as low as you possibly can, the fastest way to then get rid of your debt is to increase the money that is coming in. A great thing to do is aim to have one or more income streams dedicated solely to paying off your debt – that way you don’t have to reduce your expenses any more and feel too deprived.

Ways that you could earn extra income could be:

  • Matched betting
  • Mystery shopping
  • Answering surveys
  • Dog boarding/pet sitting
  • House sitting
  • Blogging
  • Freelance writing
  • Entering competitions
  • Selling your stuff on eBay, Gumtree, Facebook marketplace, car boot sales etc
  • Re-selling (where you buy stuff cheap and sell on for higher prices for a profit)

Are you on a debt payoff journey? Are there any tips that you could add to the above?

Top 5 money lessons to know before graduating

We don’t learn about money in university, or in younger education at that. It’s sad but it’s true – no one teaches us how to pay taxes, how to budget and what a mortgage is. And yet, money is essential! No matter what career you get into, you’ll be earning a salary and using money to buy food, transport, etc.

So if the schools won’t teach us, we need to teach ourselves. Based on the several months I’ve been working and researching with Financially Mint, here are the top 5 money lessons you need to know before graduating.

Top 5 money lessons to know before graduating

1. Money is just a tool

My life changed when I realised I didn’t have to spend my entire life working for money at a job I didn’t like just to pay the bills and have a roof over my head.

Money is your tool to live how you want. You are the one who chooses what to do with it. If you want to use it to travel the world, that’s on you. If you want to use it on going out every weekend, that’s also on you. It’s about making priorities and deciding what you really want. Once you understand that, you realise that money is just a tool to achieve your goals and dreams; what you really need is willpower and a desire to do better.

And the key to making sure you use your money correctly is financial education – what we’re not taught in schools. Learning how to invest, how to start a side-hustle, how to save money. These are things we need to learn by ourselves, and the more we study them the better we get at it. So get started in college!

2. Invest, invest, invest

The key to growing your wealth: investing.

Investing is stowing away your money somewhere safe and watching it grow. It’s starting off with £500 and seeing it grow to £100,000 over 20 years. It’s what lets people retire early and always have cash for emergencies.

If you don’t want to start investing in college (check my how to get started in uni post), I recommend at least learning the basics and preparing for investing once you graduate. Invest into low fee index funds and put away some money every month. Watch your money grow into something useable for the future: a car, a house, retirement, etc.

Investing is one of the pillars of financial education, so I recommend every student to get started as soon as possible.

Top 5 money lessons to know before graduating

3. Control is key

Control means knowing where your money is and what it’s doing at all times. It means not having a heart attack every time you open your bank account (it happens) and it means knowing where to put your money once you get your paycheck.

This starts with a nice and simple budget. In my 6 day course, that The Frugal Frenchie has reviewed, we go back to the basics of budgeting: allocating your money to the right expenses and making sure you reach your ambitions/goals.

Being in control of your money outflows and inflows before graduating will make your entry into the workforce so much easier. You won’t have a pressure to get a job immediately (Emergency fund to the rescue!), you’ll know what kind of salary you’re looking for and you’ll know exactly where to put your money every month.

4. Don’t be in debt

Debt can good and can be bad. But when it’s bad, it’s pretty bad. The bad debt: credit card debt and payday loans. As a student, you hopefully will have very little debt (student loans are a separate case), and you really want to keep it that way. Credit card debt accumulates and will get more expensive every time – pay off all your debt and make sure you know what you’re doing if you take on any more debt.

Student loans are another story altogether. In fact, they’re so different that some people prefer calling your student loan debt a contribution, simply because the situation is so particular. Before graduating, take a look at your student loans and decide whether you want to pay them off. This post on Should I pay off my student loans? will give you an idea of how to make a decision and plan appropriately. And as always, do your research.  

Top 5 money lessons to know before graduating

5. Pay yourself first

The best part of the budget: yourself.

This means allocating a certain percentage of your income to yourself, to your goals. And you can start this in college: the minute you get your paycheck/loan/money each month, allocate 15% to your goals, to your emergency fund, to your debts. That 15% is what will get you out of the rat race, out of living from paycheck to paycheck.

If you start paying yourself first in college you will actually be prepared for adult life (shock horror). You’ll be way more flexible and really be able to pick the job you want – because you’ll have an emergency fund, you’ll be debt free and will have the motivation to keep working on your goals.

Again, this starts with the mighty budget. At the time of calculating your budget from your income, the first thing you do is allocate that 15% to ‘Savings’. And then the rest is for your expenses! No need to worry about saving up more.

Understanding these 5 lessons on money will get you prepared for the world after graduation. Heck, it’ll even get you excited – you understand that you don’t have to be stuck at a job you just tolerate, you can achieve that flexibility to help you find the job that works best for. It all starts with being in control and financially educated.

5 Must-Read Money Books for Millennials

Today, the lovely lady behind Boost My Budget has given us her favourite money books for millennials. They are all designed to help inform us about money, investing and giving us useful money tips! Take a look and I hope you find them useful!

The Frugal Frenchie x

 Most of us aren’t taught about money in school. But why not?

Chances are you use money every single day. Money – or lack of it – can affect our comfort, stress levels and daily life like nothing else. I’d argue it’s the most important thing you can spend time learning about!

Luckily, there are loads of great books out there that can help you out. Whether you want to learn about budgeting or investing, living with less or earning more, there’s a book that can answer all your questions.

Here’s my pick of five great books to start you off on the right foot.

Broke Millennial: Stop Scraping By and Get Your Financial Life Together by Erin Lowry

If you only read one book about money, make it this. Erin blogs about money over at Broke Millennial, and she’s recently released her first book by the same name.

This one book covers absolutely everything you wanted to know about money but didn’t know who to ask. From personal finance basics such as understanding credit scores and student loans to trickier issues such as awkward money conversations with your partner or asking your boss for a pay rise – it’s all here.

You can read this book cover to cover or keep it as a kind of reference guide to dip in and out of. Also, this book is funny and easy to read. It feels like having an honest chat with a particularly savvy friend.

Millionaire Teacher:The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam 

Andrew Hallam became a millionaire in his 30s while earning a very normal salary as a teacher. In this book, he explains how you can make your first million too! And no, you don’t have to score a record contract or invent a groundbreaking new tech product. Andrew’s method is based on living simply, saving and investing – a method accessible to anyone, at any age and on any salary.

I often hear people from our age group wondering what’s the point in saving when we don’t seem to earn enough. If that’s you, this book will prove you wrong. Not only will it change your money mindset and explain exactly why you should want to save and invest, it gives you a step-by- step road map to follow.

Hint: Andrew’s recommended form of investing is nothing to do with yelling down the phone at your stock broker like you see in films. It’s called “passive investing” and it takes just an hour of your time… per year.

Even if you’ve never considered investing before, you’ll be itching to open your first account before you even finish this book!

I Will Teach You to Be Rich: No guilt, no excuses – just a 6-week programme by Ramit Sethi

With a title like that, how can you resist! I Will Teach You to Be Rich is a six-week plan to get your financial act together. If you follow the easy steps in each chapter, you’ll go from knowing zero about money to having the best possible bank accounts and credit cards, a plan to pay off debt, a super simple budget, and automated savings and investment accounts.

The best thing is, the plan is designed for lazy people. This book will teach you how to set it and forget it so you can get on with living life, without juggling piles of bills and receipts each month. I Will Teach You to Be Rich is aimed mostly at young professionals with a bit of disposable income – but anyone who reads this book will learn something to improve their finances. It also comes with loads of extras, such as downloadable spreadsheets, scripts for tricky phone calls to the bank, and links to online tools.

There’s a UK edition and a US edition, so make sure you pick up the one that’s most relevant to you.

5 Must-Read Money Books for Millennials

Your Money or Your Life  by Vicki Robin and Joe Dominguez

This is a personal finance classic that will completely change the way you think about money.

Your Money or Your Life came out around 20 years ago but it still feels really fresh and modern to me. It encourages a lifestyle based on simple, frugal living, anti-consumerism and mindfulness. It teaches you to see money in terms of your time and energy and helps you work out your real priorities in life.

This is the book that kicked off a whole movement based on retirement. Yes, there are people who retire early – seriously early, like in their 30s – and it’s possible for you, too! Your Money or Your Life is a must for anyone who feels like money worries rule their life, and wants to embrace a different way of living.

The 4-Hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich  by Timothy Ferriss

Ok, this isn’t strictly a ‘money book’, but I had to include it because a) it’s brilliant, and b), it will totally change the way you relate to working life – which is basically all about money anyway.

The 4-Hour Work Week will change the way you think about careers, entrepreneurship, and what you’re doing with your life. This is an awesome book for millennials staring down the road of 40+ long years before retirement. It will fire you up and arm you with practical suggestions on how to live a different life.

There are loads of fantastic tips on time management and productivity which will serve you well whether you’re a student, employee or wannabe entrepreneur. It even gives you a step-by- step guide on how to start your own side business.

What do you think of my selection? Do you have any other favourite money books? I’d love to hear your suggestions, let me know in the comments below! Alternatively, you can tweet me at @BoostMyBudget

Get your dream wedding dress for less

I’d like to think I’m quite a frugal person, but there are some things that I’d just have no clue about unless I did some research first. Buying houses, budgeting for kids, and weddings for example. As a result, I thought I would ask my good friend Fiona over at SavvyinSomerset to give us her tips on how to buy your dream wedding dress for less.

The Frugal Frenchie x

Whether you’ve been dreaming of your big day since you were little or are brand new to the world of weddings, there’s one thing every girl needs to get right on her big day: The Dress. In this post I’m going to outline my top tips for getting your dream dress for less. Whether your budget is £100 or £1000 there is always something you can do save a little bit of cash without missing out on your dream wedding look.

Buy Second Hand

If you’ve fallen in love with a designer dress but can’t afford the designer price tag than buying second hand may be worth considering. Remember wedding dresses are often only worn for a few hours – some people even change into a less glamorous (but more comfortable) dress for the evening – so the dress could well be in a like a new condition. They also tend to go for way below the original asking price around 75% off (except for certain designs which hold their value really well such as the recent Disney collection from Alfred Angelo).

It’s always wise to have an appointment at a bridal store to try on some dresses so you get an idea of what shape and style you like –  often people have their heart set on a certain style of dress only to discover it doesn’t actually suit them. If you find a dress you love at a boutique but can’t justify the price, this may be the time to start looking online to see if it’s available second hand.

There are loads of places online to find second-hand wedding dresses the most popular being eBay and Pre-Loved. These are great if you are searching for a particular dress by a specific designer – the downside is that you may not be able to try the dress on, so are taking a bit of a gamble. Also, the condition can vary – if unsure ask for lots of pictures, someone who is genuine should be happy to oblige. 

Local Facebook selling groups are also a great place to look for second-hand dresses – my town has a group dedicated to just wedding buying and selling. The upside of this that is that you should be able to see and possibly try the dress on before purchasing as the person selling is likely to be local to you.

Many charity shops have a Wedding dress section. Oxfam actually has some stores that only sell wedding dresses and nothing else. If you don’t have too specific style in mind and don’t rummaging through some more retro styles this could be a great way to find your dream dress for much, much less money. And of course, whatever you end up spending will be going to a good cause too – it’s win-win.

 Try Wed 2 B

Wed 2 B is the largest bridal retailer in the UK with a whopping 23 stores – all of which are open 7 days a week. While the set up is much less formal than a traditional bridal boutique (where you are usually the only bride trying on dresses) this is offset by the fact ALL dresses are £599 or under. All dresses are also ‘off the peg’ which means you can take the dress home with you on the day, so no waiting around for it to be made.

However, this could also mean you feel extra pressure to buy the dress there and then as you might not be able to find again another day. Make sure you are 100% sure before you buy. Also, don’t forget to factor in the cost of alterations – wedding dresses – especially strapless ones! – need to fit perfectly so even if a dress is your size it may still need adjustments.

 Find a Sample Sale

The way most bridal boutiques work is that they have ‘sample’ dresses that brides try on. When a bride finds a dress she loves her measurements are sent off to the designer and the dress is made to order. This whole process takes around six months and then the dress may still need further alterations once it arrives back to the shop.

As new designs are released each year bridal stores will update their collections and sell off the ‘sample’ of dresses they no longer plan to stock. This means you could get a designer dress for a much smaller price. The dresses are new but will have been tried on, although probably only for a few minutes at a time. They usually only come in one size so again alterations are likely to be required. These dresses are usually considered off the peg and you will be able to them home with you the same day.

Have a dress Tailor Made

Having a dress tailor made by a dress maker or seamstress could work out considerably cheaper than buying a dress from a bridal boutique. This could be a great option if you’re looking for something less traditional – maybe something a bit more colourful or a different style to what would be considered the norm. 

It also means if there is a dress you love the look of but would like to change sightly – such as adding sleeves or straps it’s much easier to do this from scratch than adding to a dress that has already been made. 

Should you buy from China via eBay?

Ah. The elephant in the room. Should you buy a cheap copy of a designer dress for around £100 from China?

In my opinion, the likelihood is that you will disappointed, especially if you’ve been to a boutique and tried on dresses there. Don’t get me wrong, I’ve seen some amazing dresses that come from China and the brides have been very happy. I have also seen some complete horror stories. I guess it depends whether you want to risk your money and how much £100 means to you.

If it goes well you’ve saved yourself a fortune – if it goes badly you’ve lost £100. Remember that items coming from China could well be subject to customs charges and these will need to be paid before HMRC will let you have your items.

Also, don’t be fooled by UK sellers selling lots of dresses at a similar price and specification to Chinese ones – they are simply buying in bulk from China and selling on so it will be the same quality but you may just get your dress a bit faster.

Consider wearing a Bridesmaids Dress

If you’re having a simple wedding or don’t want a big, over-fussy dress it might be worth considering buying a bridesmaids dress instead of a wedding dress. Even some of the most expensive bridesmaids’ dresses are still much cheaper than actual wedding dresses. If you want to hunt out a super bargain, try hitting the department store sales in July and August. This is also a great idea if you don’t plan to wear white or are looking for something a bit less traditional.

I hope these tips help you to find your perfect dress for less – however, there are still a few hidden costs you may want to factor in;

  • If planning to buy a dress online don’t forget to factor in the cost of shipping and possibly dry cleaning in-case the dress isn’t quite in the conditional you would like it to be.

  • Some (not all) Bridal boutiques will charge for an appointment to try on dresses – this will then be deducted from the cost if you end up buying a dress

  • The Bridal boutique I used charged for a dress cover, storage of my dress, insurance and steaming before I collected it. It was around £40 and I thought it was worth it but it’s another cost to be aware of.

  • As mentioned above – be aware of customs charges if ordering a dress from China.

  • Don’t forget to factor in the cost of dress accessories such as hoops and petticoats and a good bra!

Looking to save more your wedding? Check out my post on 5 things that won’t actually save you any cash! 

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